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State implements Medicaid 'death tax'

Stephen Berend

James and Wanda Hood are at risk of having a lien placed on their Effingham County mobile home because the federal government recently denied Georgia's request to raise the value of assets exempted from Medicaid estate recovery from $25,000 to $100,000. The couple had planned to pass on their property, worth $39,000, to their four children.

The federal government recently denied a Georgia legislative attempt to shield assets the state can recover from Medicaid nursing home and home-care patients after they die.

As a result, the state has begun implementing the Medicaid estate recovery program - dubbed the Medicaid "death tax" - to recoup money paid out for long-term care provided through Medicaid. Funds are recovered from the beneficiary's estate, after death, for the cost of these services.

Estate recovery was postponed after the Georgia General Assembly passed legislation earlier this year that proposed to raise the value of assets exempted from recovery from $25,000 to $100,000, said Julie Kerlin, spokeswoman for the Department of Community Health, which oversees Medicaid in Georgia.

Among the reasons for the proposed cap increase was the expense the state is going to incur going after every estate worth more than $25,000.

The Centers for Medicare & Medicaid Services rejected that request, saying the state failed to show how exempting estates under $100,000 was cost effective.

"While you indicate there are costs to the state in pursuing recoveries, you have not demonstrated how these costs would exceed the benefit to the Department on either a case-by-case or on an average basis," CMS Administrator Mark McClellan, wrote in a letter to Mark Trail, director of medical assistance plans with DCH.

The state does not plan to appeal the decision, Kerlin said. The denial means the initial provisions adopted remain in place. That includes allowing the state to recover expenses dating back to Aug. 1, 2001.

Recovery can be delayed when there is a surviving spouse, young children, or a disabled adult child.

Still, the recovery is expected to be wide-reaching, with Medicaid covering about 80 percent of Georgians in nursing homes.

The estate recovery program affects an estimated 40,000 people statewide, 6,000 in Chatham County, including those obtaining Medicaid-funded home-care provided as an alternative to institutionalization.

Wanda and James Hood said a $100,000 cap would have protected their $39,000 mobile home in Effingham County.

But the cap decrease has Wanda Hood, 65, fearful that the state will place a lien on their home after one of them dies. They're expected to reimburse the state for the Medicaid funds James, 75, has received since his December stroke.

The remaining spouse will be able to remain in the home. But after he or she dies, Wanda Hood said she expects the state will come in and sell it, leaving nothing for their four grown children.

"A lot of people thought they were safe because the legislation had been passed," said managing attorney Bill Broker at Georgia Legal Services.

"They haven't heard about this change yet. But when they do, I expect it will cause considerable concern."

Broker said keeping the cap at $25,000 will adversely affect people who have worked hard to put together relatively small estates.

"We're in a climate when we are reducing taxes on the wealthy," Broker said.

"But look what we're doing to middle-class people who worked all their lives, lived frugally and invested in their homes."

Few homes are worth $25,000 or less, Broker said.

"With it being rolled back to $25,000, basically anyone who owns a home is going to be subject to estate recovery," Broker said.

"Twenty-five thousand dollars is going to catch everybody."

MEDICAID ESTATE RECOVERY

What is it?

Mandated by federal law in 1993, the program calls for recipients of Medicaid nursing home funds, who have estates worth more than $25,000, to reimburse the state for the nursing care and home-care provided through Medicaid.

Dubbed the Medicaid "death tax," the mandate requires states to recover assets from Medicaid patients' estates after their deaths. An estate includes your home and any other assets.

Georgia and Michigan are the last states nationally to implement estate recovery.

- Savannah Morning News

What happened?

Medicaid beneficiaries who qualify for estate recovery began receiving notification by mail that the program was expected to start May 1. They had until April 14 to "opt out" of Medicaid and not be subject to estate recovery.

Estate recovery implementation was delayed after state legislators passed a bill that proposed to increase the value of assets exempted from estate recovery from $25,000 to $100,000.

The Centers for Medicare & Medicaid Services recently rejected that request and the state started implementation.

Who is affected?

Medicaid beneficiaries including:

Those of any age who reside in a nursing facility, intermediate care facility for the mentally retarded, or other medical institution and have been determined permanently institutionalized.

Those who are age 55 or older and who receive nursing home or home and community-based services.

What's next?

The state will recover expenses paid for your Medicaid-funded medical care dating back to Aug. 1, 2001.